Jesse Jones

Early court victory gives hope of a lifeline to small businesses struggling with pandemic shutdowns

OAK HARBOR, Wash. — Dr. Sarah Hill is one of thousands of business owners who’ve taken serious economic hits levied by the governor’s statewide COVID-19 shutdowns.

“It was tough. It was unexpected. It was complete,” says Dr. Hill.

Hill’s Playhouse Dental in Oak Harbor was shut down for two months. She has business interruption insurance through Mutual of Enumclaw. But before she could even file a claim, the insurer sent this letter saying it may not cover losses due to the coronavirus.

“That’s not fair. Isn’t that why you have insurance? You have it when times are tough and when you need it,” says Hill.

Hill then sued the insurer in King County Superior Court and just won an important hearing: the judge denied the insurance company’s motion to dismiss the case.

Attorney Ian Birk represents Dr. Hill.

“This is the first business in Washington that has received an initial favorable ruling from a court on COVID business interruption insurance,” says Birk. “That allows the claim to go forward where we can present our claim on the merits, that the insurance policy covers this business from its loss of business from the government shutdown.”

We’ve been talking to business owners about their insurance claims for months.

Barre studio owner Kimberly Johanson is suing her insurer, The Hartford, after her claim was denied.

“We do deserve the support of our insurance that we’ve paid into for years,” says Johanson.

Insurers we’ve spoken to say they see business interruption as loss due only to physical damage to property like during a weather event or a riot.

“Words are important. The contract says ‘or.’ The contract says ‘loss of covered property or damage to covered property’ and our argument in court is they’re two different things,” says Birk.

In our investigation, we haven’t found a single case where a company has paid a coronavirus shutdown-caused business interruption claim.

Insurance commissioner Mike Kreidler says he is taking a sharp look at these cases.

“Wait for the smoke to clear before making any changes. We need the industry but we expect them to live up to their promises,” says Kreidler.

Hill says her business will continue to fight through the tough times. But her insurance company needs to pay claims with the efficiency it collects premiums.

“It’s the principle, insurance needs to be there and follow through on their promises,” says Hill.

We have not received a response to our report from Mutual of Enumclaw.

Hill’s case will next spar over exclusions in the policy. That should take weeks to sort out at the earliest.

We will follow this and other business interruption cases as they wind through courtrooms across the state.

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